ROSCAs: A Model for Sustainable Economic Development

June 17, 2022

Women in small communities across the world are building resilient economic systems that nurture solidarity, equity, and trust. A project in Toronto aims to bring their wisdom to the public realm.

Women of the African diaspora in Ontario, Canada and beyond operate ROSCAs (Rotating Credit and Saving Associations) as a way to avoid the racism they so often face when trying to access financial services through the conventional banking system. As well as providing financial support, this type of informal system also helps build and maintain a strong sense of community, trust, and mutual aid among racialized groups, who face layered challenges in Canadian society.

Unfortunately, however, Black and racialized women who organize ROSCAs face racist interventions from state authorities, with police harassing members and confiscating funds without due cause. The Banker Ladies Council was set up as part of the Black Social Economy Project, led by Post Growth Fellow, Dr. Caroline Shenaz Hossein, of the University of Toronto Scarborough (UTSC), in order to put a stop to this harm and violence against Black women organizers — as well as to highlight the benefits of the Black Social Economy in transforming unequal economic systems in wider society.

On April 22, 2022, 12 members of the Banker Ladies Council met, along with four participants from UTSC, for the first time to discuss how Black social economies in Canada can be improved, and how they can inspire an inclusive financial environment. As organizers with vast expertise gained from their lived experience, both as agents of change and victims of discrimination, the women of the council are uniquely placed to help shift the narrative of ROSCAs — from one of erasure to one of cooperation and sustainable, bottom-up economic development.

The meeting was an opportunity for members to share stories of the exclusion they have experienced while trying to engage with formal financial institutions, and the violence they have faced when operating their ROSCAs. It also provided the platform for some of the Banker Ladies to share personal examples of the benefits of ROSCAs.

The many benefits of ROSCAs

Esther Enyolu, a Nigerian-Canadian who has founded multiple worker cooperatives, spoke about the power of ROSCAs and cooperatives to assist abused and vulnerable women. She has leveraged funds in the nonprofit sector to build humane cooperative systems for Black and racialized women across Toronto. “Coops are about creating something for yourself and with others,” said Esther, pointing out that charity can, by design, prevent people from becoming independent.

Juliet Kego, a Nigerian-Canadian and founder of the Black Women Professional Worker Cooperative, said that the ROSCA helped her finish her Master’s degree, because she had a group of women who supported her dreams. For Juliet, the most important aspect of the group is not the money but the ability to bring women together to resist social injustice.

Andria Barrett, a Black Canadian of Jamaican heritage who is running for office as an Member of Provincial Parliament, revealed that she is part of a Jamaican ROSCA called a ‘partner’ to support her campaign fundraising, using informal funding streams to run for political office and, in turn, transform the lives of marginalized and excluded people.

ROSCAs around the world

While the term ROSCA was coined by a European as recently as the 1960s, the systems it describes have been used for much longer, providing a lifeline to those who have limited access to formal financial institutions. They are prevalent across Africa, Asia, the Caribbean, Latin America, and the Pacific, and are known by a range of different names: In Ghana it’s Susu; in India, Chit; in South Africa, Stokvel; and in Somalia, Hagbad or Ayuuto.

In Ghana, although informal Susu are still in existence, the government has taken steps to improve them through regulation. In 1994, the Ghana Cooperative Susu Collectors Association (GCSCA) was founded to license all Susu companies and is regulated by the Central Bank of Ghana (BOG). The GCSCA offers essential education to groups and members, provides a forum for regulators and stakeholders to interact, defines what a Susu is, and stipulates the localities that specific Susu collectors and enterprises can operate, for example a town, city, or marketplace.

In South Africa, Stokvels are licensed by the National Association of Stokvel of South Africa (NASASA). Formed in 1988, following massive discrimination and violence against Stokvel groups and members by the apartheid regime, NASASA oversees Stokvel activities and protects against fraud and other injustices. Like the GCSCA, the NASASA provides information on how to improve stokvel services and serve people better. It has also partnered with both state and private institutions such as the Cooperative Banks Development Agency (CBDA), which promotes cooperative banking in South Africa; the National Treasury, which manages the country’s economic policy and government budget; and the Financial Sector Conduct Authority (FSCA), which regulates market conduct. These partners ensure that Stokvels’ services are improved and that members have access to subsidized products.

Chits, which originate in southern India, have been in existence for over 1000 years. Today, across the country, there are around 15,000 Chit groups and companies in operation. The government began regulating Chits back in 1945, and despite a nationwide act in 1982 requiring all Chits to be licensed, it is estimated that around half remain informal, occuring in small communities and friendship groups, often in rural areas. Of the licensed Chits, some, such as the Kerala State Financial Enterprises, are state owned, and others are run by private businesses and entrepreneurs.

As the Banker Ladies Council continues to develop, the group is focused on drawing from these models and insights to decide on a new, non-western name for ROSCAs and exactly how to define them, as well as whether they should be formalized, for example by weighing the benefits and drawbacks of licensing. The women are consulting with their networks and communities to identify their needs, gather ideas for advocating for ROSCAs, and tap into the deep pool of knowledge that Black and racialized communities already have about cooperativism.

Women in small communities across the world are building resilient economic systems. It’s time they were heard and recognized, and their wisdom harnessed to counter racism and nurture solidarity and equity on a much larger scale.

Three things you can do right now:

  1. Find out more in Caroline’s new book, The Black Social Economy in the Americas: Exploring Diverse Community-Based Markets.
  2. Help promote this article by sharing these posts on Facebook and LinkedInSign up here for email alerts when articles like this are shared on social media.
  3. If you’re in Canada, write to you local MP and ask for ROSCAs to be recognized. You can also write to the Deputy Prime Minister, Chrystia Freeland— the most senior woman politician in Canada —as she is helping to lead a government that says it is a feminist one.

Natalie Holmes

Natalie Holmes is a freelance writer and editor working in the fields of regenerative economics and humanitarian support & solidarity. She is the managing editor of Post Growth Perspectives, the online publication of the Post Growth Institute.

Tags: economic racism, Mutual Aid Networks, post-growth, ROSCAS, solidarity economy